Safaricom to invest in alternative energy

June 21, 2008 12:00 am

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By Evelyn Njoroge, NAIROBI, June 21- Mobile Phone Operator Safaricom Saturday revealed that it was looking at investing in alternative sources of energy to mitigate the high costs of fuel currently running at over Sh151 million per month.

Safaricom Chief Executive Officer Michael Joseph said they had received permission from the Kenya Power and Lighting Company (KPLC) to build their own power lines from the national grid in order to reduce their over reliance on fuel.

“We are pulling our own power lines some times 30 Kilometers (km) or 40 Km from the grid and we are doing it as fast as we can,” he remarked.

Speaking to members of a Nairobi-based business club, the CEO said pilot projects on the use of wind, solar energy and generators were currently underway in about 32 base stations across the country.

Joseph added that they were also running some test on a Canadian manufactured battery which powers their generators and which requires less energy.

“The battery uses less power as it does not require to be cooled,” he explained.

He also disclosed that the operator would spend about Sh20 billion to expand and improve its network in a bid to ease congestion.

“We have so far invested close to $1billion on the network and we are not even done yet,” Joseph remarked.

He stressed that they were constantly upgrading their network to enable them to provide quality services to their subscriber base which currently stands at 11 million.

Towards this end, Joseph hinted that Safaricom would be opening a customer care center along Mombasa Road in the next two months.

The CEO also disclosed that they have a plan to encourage its subscribers who use the heavy mobile phone data service to start using their newly launched 3G technology.

“We will probably come up with a campaign to give away 3G enabled handsets to encourage as many users as possible to use the technology which is more stable and provide high speed,” he added.

He observed that this move would not only assist them in diversifying the company’s portfolio beyond its traditional voice service but would also reduce the congestion experienced in the 2G technology which is currently being used by the majority of its customers.

Asked what his take was on the entry of two new players in the market b October, the Joseph warned that expected mobile phone tariff price wars following their entry would not result in increased phone calls duration.

Joseph said he was doubtful as to whether bringing down prices further for the subscribers would mean increased volumes for them.

The new players, Econet Wireless and Telkom Kenya which is expected to launch their products under the Orange brand following the sell of a 51 percent stake to France Telkom, he observed would need to invest in network infrastructure as opposed to waging a tariff war.

Joseph was however quick to add that Safaricom had been preparing for competition for the last one year.

“They will definitely be a disruptor but we are ready for the competition,” he enthused.

Underscoring that his company currently holds an 85 percent market share, Joseph decried the lack of competition in the market adding that it was in his company’s interest to have a formidable competition.

This he empathised would assist them to be innovative and avoid complacency among his staff.

At the same function, Economist Aly-Khan Satchu predicted that Safaricom shares would begin to appreciate in the coming days.

He noted that the share, which has been trading at an average of Sh7.50, would hit the Sh8 or Sh10 mark in a few days.

Satchu said activity at the bourse, which was stirred by the entry of the shares two weeks ago, had eased following the sale of the stocks by the short term investors.

“Many people who wanted to sell (their shares) have already done so and we are now left with medium- term investors,” he expressed.

This, he said, would result in the limited supply of the shares which would eventually push the price up.